With the help of a Systematic Investment Plan or SIP, investors can conduct period investment through small batches and fulfill their financial goals by generating wealth through their preferred investment scheme. While setting up a SIP the regularity of the investment, investment amount, date, etc. are already determined by the investor and they take the assistance of the mutual fund SIP calculator before finalizing the investment.
A lot of people prefer to invest in SIP because it helps them lessen any kind of financial burden while it also influences them to build up a methodical investment habit. More importantly, the benefits of SIP can be claimed regardless of whether the market is rising or falling.
How to invest in SIP or Systematic Investment Plan?
If you don’t exactly know how you can invest in a SIP then you should follow the steps mentioned below:
Know your investment objective and your risk appetite
Before thinking about investing in a SIP the first thing you need to do is to find out about your risk tolerance and your financial objectives. There are both high-risk and limited-risk mutual funds available in the market and according to your risk appetite you can choose from them. More importantly, your financial objective will determine the type of mutual fund you would want to invest in.
Select a proper mutual fund
If you are new to the investment market then remember that there are more than 8000 mutual funds available in the Indian market and all of them have different objectives, features, and portfolio distribution. When picking a certain mutual fund you should check its basic information along with its past performances, investment horizon, previous history of the fund manager and the asset management company, etc.
Determine your investment method
After you have successfully selected a specific mutual fund investment scheme you need to determine how you want to proceed further. You can select between the two procedures mentioned below:
Online Process
If you are a new investor then you will have to create a Demat account with a depository participant of your choice and complete the KYC process by providing all the important information. Once you are done with it you can select the mutual fund scheme from the depository participant’s platform and pay online to start your investment journey.
Offline Process
You also have the option to invest through the offline method but it is more complicated and time-consuming. You will have to physically visit the branch office of the mutual fund house, and fill out their application form along with the KYC form. Then you will have to provide them with a canceled cheque and an auto-debit form to complete the entire process.
Select the date of the SIP
After successful completion of the above-mentioned procedure you are ready to invest in a SIP but to begin the process you will have to select a particular date when the investment amount will be debited from your bank account. You can take the assistance of a mutual fund SIP calculator while completing the same.
Final words
SIP comes with lots of advantages and it is specially designed to help retail investors who cannot invest a huge amount of money in mutual fund schemes. However, it is extremely important to use a mutual fund SIP calculator before you end up finalizing your SIP. The mutual fund SIP calculator can help you estimate your return on investment so that you can cross-check if the returns are aligned with your financial objectives or not. So remember to use the SIP calculator before initiating your investment.
